Quadratica on the lookout for new investment

QUADRATICA UK, which helps train the staff tasked with detecting security threats in airport baggage, is gearing up to seek investment to help propel the firm to the next level.

The Grimsby-based company has a team of only 10, but has 95 per cent of the UK airport security market and counts among its client base the likes of BAA, Manchester Airport, G4S, Securitas and Rapiscan.

The business, which is forecasting an annual turnover of £1.1m in the year to the end of December, is backed by YFM Equity Partners.

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Managing director Chris Grey said: “We’ve got to raise significant finance now to take us to the next level and so we are preparing the company to make us attractive to new investment.

“We’ve also got to diversify more. We’ve got to find new sectors in new markets.”

Quadratica UK’s primary product, X-Screen, teaches operators of security X-ray equipment how to interpret the images they see via computer-based training.

Mr Grey explained: “So if they see a bag going through in an airport, if there’s something interesting in that bag they should be able to recognise it for what it is, and also by association if they don’t recognise it for what it is they know what to do.”

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As well as serving the aviation sector – its primary market – the business already works with the prison service and has won work for big events such as London 2012 for which it trained 22,500 security operatives.

Mr Grey said the amount of money the firm is looking to attract is going to be “serious money”.

“We’ve either got to find somebody who wants to buy out YFM and take us into a synergistic company, so somebody who is already in aviation or some other industry where our technology fits and allow us to use their resources to develop our portfolio of offerings... or an outright buy of the whole company. We would be looking for them to pay enough to buy the company and invest in the company as well.”

The aim is, he said, to have a wider offering to offer to a broader audience. Mr Grey also wants to take on new staff. He said that the firm has “tested the waters”, adding: “There does seem to be interest out there. But we don’t want to do it until we are ready.”

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Recent new contract wins include Capita, Malaysian Airports Training Centre, Edinburgh Airport and the Central Industrial Security Force of India. Quadratica UK is also looking at Brazil in the lead-up to its hosting of the World Cup and Olympic Games, while China is a big target for the business.

A significant amount of the firm’s sales are already export-based, with key markets including India and the Middle East.

YFM Equity Partners originally invested in the company in July 2007 and made two follow-on investments in 2008 and 2009 to support a new business plan. It also appointed Brendan Holt, the chairman.

“In 2009, we were in a position where we pretty much dominated the market,” said Mr Grey. The business also bought competitor, Grimsby-based Smart Approach, to get access to its distributor network.

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Quadratica UK made a decision early on to make its products accessible to all sizes of business. “Instead of selling the software as a product we went more down the software as a service selling annual licences.

“We also decided it should be available for people over the internet.”

Using X-ray equipment to check airport passengers’ baggage for security threats is a job of great responsibility. Mr Grey said: “Every day they will be presented with hundreds of images that nobody has ever seen before because every bag is different.

“And they are expected to look at those and determine whether there’s a small knife in there or a firearm... and they get an average of five seconds.”

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Today, security officers must complete an hour’s refresher training a month – but it wasn’t always the case. Mr Grey said: “Slowly over the years the government hardened their stance and brought in the national X-ray competency test which everyone has to take once a year.

“Then, ultimately, if you fast-forward to today everyone doing that job has to take an hour’s refresher a month. It’s a huge step change.”

These regulations have proved “a huge boost” for Quadratica UK.

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